EB5Info.com Sept-Oct 2014 Newsletter

The Source for Information on the U.S. EB-5 Visa Program

The Source for News and Information on the U.S. EB-5 Visa Program SEPT/OCT 2014

Florida Organic Aquaculture Project Funded by EB-5, pg. 4

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Wealthy Chinese Heading Overseas, pg.19

contents EB5news.COM

EDITOR’S LETTER

EDITOR’S LETTER

EB5News.COM

FEATURES

USADVISORS.ORG news and information on the

Florida Organic Aquaculture Project Funded by EB-5

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Politics and the South Dakota EB-5 Investigation

USCIS EB-5 Visa Immigrant Investor program and is powered

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by USAdvisors, a Registered Investment Advisory Firm, that performs independent Risk Analysis and Due Diligence on EB-5 Visa Regional Center projects to help clients make educated decisions based on

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EB-5 Attorneys Charged with $47M in Securities Fraud

facts related to the EB-5 Visa investment.

CONTACT

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Michael Gibson,

Homewood Suites in Atlanta Opens Due to EB-5 Funding

Says – Wealthy 19 Survey Chinese Heading Overseas

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MPI Report Findings on Immigrant Investor Programs such as EB-5

Managing Director Registered Investment Advisor CRD #157403 michael@usadvisors.org

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Facebook cell : 305.978.1108 office : 239.465.4160

This issue of EB-5 News has two successful projects funded

by EB-5 investors. Florida Organic Aquaculture in Fellsmere is managed by Mirzam Investor Green Card, LLC and offers sustainably grown, all natural environmentally beneficial seafood. They raised $16 million for the project, and are now in phase two. The second project is a Homewood Suites in East Point, Ga., near the Atlanta airport, managed by American Life, Inc. Specialists in real estate development and EB-5 investments, this was a $15 million project that has no mortgage, so all the investors benefit from principal preservation, monthly profit distribution and property appreciation.

South Dakota’s former governor Mike Rounds is currently running for the state senate, but is being surrounded by EB-5 controversy because of that state’s failed EB-5 program. We outline the situation starting on page 7. Additionally, a California attorney, his wife and partner are being sued in a coordinated criminal and civil action by the SEC and the FBI for $47M fraud via the EB-5 Immigrant Investor Program (page 12).

Skype: usadvisors.org

kris@usadvisors.org Skype: eb5news1

23 EB5info.COM • SEPTEMBER/OCTOBER 2014

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Kris Stell, Managing Editor

Russian Money in Britian’s EB-5-Like Program

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KRIS STELL

Managing Editor

EB5Info.com is the source for

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EB5Info.com EB-5 Newsletters EB-5 News

We round out the issue with a Migration Policy Institute report showing the trend in immigrant investor programs worldwide, a Barclays global survey which shows where the world’s rich will be migrating to, and how Russian wealth has permeated the upper reaches of society in Britain through their immigrant program.

Kris Stell Managing Editor EB-5 News

Investments Hits 25 EB-5 Social Media

16 The Source for Information on the U.S. EB-5 Visa Program

PROJECTS by

KRIS STELL

Managing Editor

EB5news.COM • SEPTEMBER/OCTOBER 2014

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n entrepreneur that came to the U.S. from South Africa for better opportunities, Clifford Morris was looking for industries with economic potential and identified the future trend of sustainable food production, but he needed funding. He turned to EB-5 and Morris is now founder and president of Mirzam Investor Green Card, LLC, which received its EB-5 Regional Center designation from USCIS in July 2010.

Morris and his team secured $1.3 million worth of seed capital for their RC between 2008-2010, and began marketing for their EB-5 project in 2011.

The first project was the development of Florida Organic Aquaculture. This Fellsmere, Fla. facility offers sustainably grown, all natural environmentally beneficial seafood.

Currently, the company serves South Florida and

has the motto, “If they aren’t good enough for our family, they aren’t good enough for yours.” (Go here for a video introduction on the project from Morris.)

About FOA As a lifelong entrepreneur, Morris, who has over 30 years of experience in private wealth management, has traveled the world and seen for himself the devastating effects of short-term, environmentally harmful agriculture and aquaculture practices. A

A ground breaking ceremony followed by a ribbon cutting in April. The second phase is currently under construction. continues next page

EB5news.COM • SEPTEMBER/OCTOBER 2014

Florida Organic Aquaculture Project Funded by EB-5

native of South Africa, Morris has long been interested in developing sustainable alternatives that will positively benefit our global health and future generations for years to come.

Morris’ system differs from traditional aquaculture. The shrimp are grown in a high density, enclosed, concentrated, temperaturecontrolled system (think an Olympic-sized swimming pool) in a bacteria culture called biofloc that’s rich with nutrients and energy. Only a handful of farms in the U.S. currently produce shrimp using modern recirculating water systems, and FOA is one of them. Morris reports high demand for the product, which is fresh, never frozen, born in the USA, and all natural (no additives or Florida Organic Aquaculture grows its shrimp in a high-density, enclosed, concentrated, chemicals). temperature-controlled system; one of the few in the country.

The facility’s official ribbon cutting ceremony To help introduce the “Happy Healthy Shrimp” to the was in April 2014, and since then, says John Billian, vice public, FOA sells the shrimp live on Saturdays at a local president of business development for FOA, “Business market in Fellsmere from 9 a.m. to 2 p.m. They are usuhas been going great! We have been selling to distribually sold out before 11 a.m. tors, restaurants, as well as direct to the public and the

feedback we have received has been outstanding! We On Board with EB-5 never get tired of hearing ‘this is the best shrimp I’ve Mirzam raised $16 million for the Florida Organic ever eaten.’ From a business perspective, the margins are Aquaculture project. Due to this success, they are now rather healthy as well.” launching a second phase and are working to raise an

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EB-5 by

Aquaculture con’t from pg. 5

EB5news.COM • SEPTEMBER/OCTOBER 2014

Welcome To Florida In this welcome to Florida video from Florida Governor Rick Scott, FOA is congratulated on creating 50 new jobs for the area, a necessity for the EB-5 Immigrant Visa Program. So what’s the status of the FOA investors?

“Currently, we have a 100% approval rate for our I-

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526s and we will be submitting our first I-829 within the next four weeks,” said Billian.

Also in place is a repayment plan, where the investors will receive their funds back in three to five years from the receipt of their permanent green card.

Politics and the South Dakota EB-5 Investigation

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The facility is located on Florida’s East Coast.

ormer South Dakota Governor Mike Rounds (R) is running for state senate. Governor from 2003 to 2011, Rounds has been linked to the failure of South Dakota’s EB-5 Immigrant Investor Program, and this involvement has put the possibility of election in jeopardy.

This from the Washington Post article ‘Why an immigration investment scandal threatens to derail GOP’s Senator majority hopes’ – “The battle for the Senate majority could wind up turning on a complex immigration investment scandal that sounds like the plot of a Coen Brothers film.”

Long heavily favored to win his state’s open Senate seat, Rounds has been plagued by questions about the state’s EB-5 program that operated problematically when he was governor. This controversy has overshadowed his campaign, opening the door for his opponents, Democrat Rick Weiland and independent Larry Pressler.

Republicans need to gain six seats for the Senate majority. An upset win by Weiland or Pressler, a former GOP senator who supported President Obama in 2008 and 2012 and has not said which party he would caucus with in the Senate, could short-circuit the Republican push to take control of the chamber.

A well-funded Democratic campaign to draw more attention to the saga has dubbed the controversy Rounds’s “Citizenship for sale scheme,” and has Rounds publicly insisting he’s done nothing wrong, while the investigation into the alleged money funneling

EB5news.COM • SEPTEMBER/OCTOBER 2014

additional $10 million in EB-5 capital. The second capital raise will be for additional production buildings.

“We already have the funding in place for the hatchery and nursery, which are currently under construction,” said Billian.

“The bulk of our EB-5 investors are from China and Venezuela. In addition, we have some investors from Peru, South Africa, and Argentina,” explained Billian.

FOA also received support from local and city governments in Fellsmere, where Mirzam is acknowledged for bringing a lot of good credibility to the EB-5 program and as having successful role in the economic development of Indian River County.

KRIS STELL

Managing Editor

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Here’s a YouTube clip with Rounds. He has attempted to distance himself from EB-5.

EB5news.COM • SEPTEMBER/OCTOBER 2014

Here’s the Democratic ad of Rounds and the controversy focused on Northern Beef Packers, which was funded by EB-5 and declared bankruptcy in 2013.

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The National Republican Senatorial Committee has launched a campaign on behalf of Rounds.

The Issue & Investigation From 2004 to 2009, South Dakota ran its EB-5 program out of a state agency, the South Dakota International Business Institute, based out of Norther State University and funded by the Governor’s Office of Economic Development. That agency’s director was Joop Bollen, and by the end, he was spending most or all of his time recruiting EB-5 investors.

For the final two years, a private company, SDRC Inc., assisted the International Business Institute with running the EB-5 program. Bollen signed the contract with SDRC Inc. without disclosing that he himself had founded the company a few days before. State officials say Bollen was not given permission to enter into a contract with SDRC Inc. In December 2009, then-economic development secretary Richard Benda signed a contract with SDRC to take over the state’s EB-5 program entirely. That same day, Bollen resigned his state position. The switch was proposed by Benda after the NSU president suggested EB-5 wasn’t a good fit at the university.

SDRC didn’t take investments itself. Instead, Bollen created at least 14 different “South Dakota Investment Funds” — with each fund bundling together a handful of immigrants’ $500,000 investments. Those funds invested in particular projects — after SDRC had skimmed $5,000 per investor off the top, and charged subsequent annual fees, details an Oct. 23 article in Vox.

The Vox article explains that at the end of 2010, when Gov. Rounds and his administration left office, that state

secretary for tourism and economic development, Richard Benda, also went to work for SDRC — monitoring South Dakota’s largest, highest-visibility project of all, a beef-packing plant called Northern Beef. Northern Beef got $100 million in investment from EB-5 visa holders.

After Benda agreed to take a job “monitoring” Northern Beef, but before he actually left his position in state government, he arranged for the state of South Dakota to give Northern Beef a $600,000 loan. In October 2012, the Northern Beef plant slaughtered its first cows; nine months later, the plant was bankrupt. An epic failure.

Rounds, as governor, signed off on the $600,000 loan that his cabinet secretary Benda arranged. The question is whether Rounds knew, when he signed off on the loan to Northern Beef, that Benda was

going to work for its investors, states Vox. “My staff told me that when he was leaving state government, he was going to work for an investor in the beef plant,” said Rounds. Benda didn’t identify which investor he would be working for, and Rounds said he didn’t prod Benda further, reports this piece.

State Attorney General Marty Jackley scheduled a grand jury for last October in connection to the $550,000 diversion. Before the grand jury could meet, Benda killed himself. A draft indictment prepared by Attorney General Marty Jackley accused Benda of diverting a $550,000 state grant from Northern

Beef to pay his own loan monitoring fees. At the time of his death, Benda was maintaining his innocence. (Here for the entire outline.)

Rounds’ Involvement Rounds’ involvement in EB-5 as an economic development tool came to light in the year after Benda’s death.

Rounds has repeatedly said that the EB-5 program operated under the state Board of Regents at Northern State University by Joop Bollen, director for the South Dakota International Business Institute, and that he played no part in its management. He claims that this focus on EB-5 is all a ploy by his opponents to divert focus away from real issues in South Dakota.

Bollen requested and received a series of expansions for EB-5 use in South Dakota. They paralleled Rounds’ economic development agenda starting in 2006.

Among the projects were the beef plant in Aberdeen, a turkey processing plant in Huron, a Deadwood casino, and electricity generation facilities in Day and Brookings counties, states an article on AberdeenNews.com.

A Sept. 23 article in the paper Public Opinion reports EB5news.COM • SEPTEMBER/OCTOBER 2014

continued. Democrats have sought to link Rounds to the state officials who oversaw EB-5.

Meanwhile, Democrat Rick Weiland is saying he would repeal the EB-5 program if elected on the basis that no one should be able to buy their way into the country.

Now the National Republican Senatorial Committee is hitting back. Rounds has started airing ads in recent days distinguishing himself from his two opponents, whom he links to President Obama and his policies. He also recently released another ad defending himself on EB-5.

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len has repeatedly declined to publicly answer questions about the EB-5 operation since current Gov. Dennis Daugaard terminated the SDRC Inc. contract, reports AberddeenNews.com in an article on Bollen’s deposition. The South Dakota Board of Regents is continuing to refuse to release the legal deposition by SDRC Inc. director Bollen, as lawsuits are still pending.

However, American News reporter Bob Mercer obtained a copy of the Bollen deposition from Darley International President Robert Stratmore.

Darley is one of the companies that was involved in the lawsuit. It explains how the EB-5 program within the state became privatized.

In answers sent to legislators, Rounds wrote that “the governor’s office was not served” with papers regarding an EB-5 related lawsuit against the state. The Rapid City Journal was given a document indicating Rounds’ office had in fact been served with EB-5 litigation papers in July 2009. The newspaper published a Thursday story in which a spokesman for Rounds said the former governor had never seen the document and was not aware the office had been served.

“It has come to our attention that the governor’s office was indeed secondarily notified of the Board of Regent’s petition order,” reads Rounds’ proposed amended response, in part. “An assistant in the governor’s office had received the notification. As a clerical function, we assume the document was simply forwarded to the Board of Regents, the attorney general’s office or the general counsel.”

Nine Years Ago An Oct. 11 AberdeenNews.com article is about a recently surfaced letter from nine years ago showing Rounds recruited foreign investors for dairy projects in South Dakota. The July 2005 letter is on state government stationery and bears the signature of Rounds. The document directly connects Rounds, as governor, to the federal EB-5 program. Rob Skjonsberg, Rounds’ chief of staff in 2005, commented that he didn’t recall the letter, and that it looks like collateral material for a pamphlet, most likely from the state Department of Agriculture or the Department of Tourism and State Development.

No Transparency Other than a deposition given in April 2014, Joop Bol-

EB-5’s Future In 2013, the federal government began aggressively cleaning up the EB-5 program.

Former head of US Citizenship and Immigration Services, Alejandro Mayorkas, took “extraordinary steps” to tighten oversight of the program and streamline the application processes for both immigrants and regional centers. The executives running regional centers are now subjected to background checks, just like the immigrant investors they’re recruiting. And the agency has hired securities experts who can actually judge whether a business plan is legitimate, and whether it’s likely to create American jobs.

EB5news.COM • SEPTEMBER/OCTOBER 2014

EB5news.COM • SEPTEMBER/OCTOBER 2014

that Rounds said Richard Benda was the only state government official who acted illegally in the EB-5 foreign investment program established during his administration and that the investigation found no evidence of involvement from additional state officials.

Rounds also answered that he wasn’t involved in the “specific transactional details” of the contract agreement reached between Benda and Bollen in 2009 for SDRC. The five-year contract gave SDRC private management and administrative control of the EB-5 program for state government. Gov. Dennis Daugaard terminated the SDRC Inc. contract on Sept. 19, 2013, after privately learning results of a state investigation into Benda’s activities.

The former governor reiterated that he was not aware during his tenure of a lawsuit the state was litigating in connection with Joop Bollen’s EB-5-related business dealings through his company, SDRC Inc. Rounds also offered his continued support of EB-5 programs in South Dakota going forward, telling the Aberdeen News in this article that he hopes the state will continue to utilize the EB-5 cash-for-citizenship program.

An article in the Rapid City Journal on Oct. 2 states a document contradicts Rounds’ testimony. Rounds sent a letter to state Sen. Larry Tidemann, the chairman of the Legislature’s Operations and Audit Committee. In the letter, Rounds seeks permission to amend one of his earlier written responses to the committee’s questions about state involvement in the federal EB-5 immigrant-investor program.

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FRAUD by

KRIS STELL

Managing Editor

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EB5news.COM • SEPTEMBER/OCTOBER 2014

Los Angeles, CA immigration attorney, his wife, law firm partner, and five companies they are invested in are being sued, in a coordinated criminal and civil action, by the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation for fraud via the EB-5 Immigrant Investor Program.

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The Charges The SEC’s civil case alleges that Justin Moongyu Lee along with Rebecca Taewon Lee and Thomas Edward Kent raised nearly $11.5 million from two dozen investors seeking to participate in the EB-5 program, which provides immigrants an opportunity to apply for U.S. residency by investing in a domestic project to create jobs for U.S. workers. The project promoted by the group was an ethanol production plant that would be built and operated in Ulysses, Kansas. However, investors’ money was misappropriated for other uses instead of the ethanol plant project. The plant was never built and the promised jobs never created, yet the Lees and Kent continued to misrepresent to investors that the project was ongoing and concealed their failure to generate the jobs required by the EB-5 program by submitting false documents to the USCIS (United States Citizenship & Immigration Services).

According to the report of the indictment by the Los Angeles Division of the FBI, a federal grand jury in Santa Ana returned a nine-count indictment that alleges Lee took approximately $47 million from 94 foreign investors. The indictment alleges that Lee used advertisements in foreign newspapers and other means to solicit Korean and Chinese nationals to invest $500,000 each, plus another $40,000 for administrative and legal fees.

Lee guaranteed small annual returns on the investments, as well as “green cards” for the foreign nationals. But, according to the indictment, Lee did not make the investments in purported biofuel production facilities and he submitted bogus paperwork to U.S. Citizenship and Immigration Services, which administers the EB-5 program.

The ethanol plant was never built and the promised jobs were never created, and the foreign nationals lost

The Project & Players The plot gets thick. The California Secretary of State lists Lee as the primary contact for the American Immigrant Investment Fund, where the Chinese nationals’ money was initially transferred. A 2007 letter from USCIS names Lee as president of the Kansas Biofuel Regional Center, through which he promoted his EB-5 ventures.

Finally, Nexsun’s own website lists Lee as the chairman and founder of the biofuel company.

Justin Lee and Kent applied to the U.S. Citizenship and Immigration Services (USCIS) in 2006 for designation as a “regional center” under the EB-5 program. They claimed there would be “substantial economic benefit” and “thousands” of new jobs for this area in southwest Kansas as a result of the ethanol plant. However, by mid-2008, construction of the plant at the site was no longer economically feasible, and the Lees and Kent concealed their failure to generate the jobs required by the EB-5 program by submitting false documents to the USCIS. They also continued to mislead investors that the proceeds from their investment were being used for the plant and even ran investor seminars in Los Angeles with the ethanol plant as the main part of the presentation even though all construction had halted. In particular, the business plan updated in June 2010 and distributed to investors falsely represented that construction was “ongoing” and the plant would be in operation before

November 2011.

“There is an obvious and stark conflict of interest in this case. Mr. Lee and Mr. Kent are EB-5 lawyers who had made direct selling efforts to solicit investors on U.S. soil. They are EB-5 lawyers who represented the investor. They are also the owners of a regional center and project owners who raised capital from the same group of investors they represented. As project owners, they participated primarily in marketing activities on US soil,” said Yi Song of Mona Shah & Associates, an experienced EB-5 attorney. (See her article on this fraud case on our sister site, EB-5info.)

continues next page

EB5news.COM • SEPTEMBER/OCTOBER 2014

EB-5 Attorneys Charged with $47M in Securities Fraud by SEC and FBI

their opportunity to obtain permanent residency. The Lees allegedly misused several million dollars raised from the ethanol plant investors for other purposes, such as financing an iron ore project in the Philippines, an allegation that is mirrored in the indictment.

Also sued are Justin Lee’s companies American Immigrant Investment Fund I, LLC; Biofuel Venture IV, LLC; Biofuel Venture V, LLC; Nexland Inc. dba Nexland Investment Group; and Nexsun Ethanol, LLC.

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Prior Allegations The story of the ethanol plant, to be built

by Lee’s company Nexsun Ethanol LLC, began in 2007. According to a 2013 article in Kansas Watchdog.org http://watchdog.org/85348/ kansas-town-feels-duped-by-ethanol-plantdeal/ the 6,000 residents of Ulysses’ high hopes of 50 good-paying jobs had long since vanished as the project came to a halt in just over a year of major promises.

In February 2013, the State Bar of California (SBC) had filed disciplinary charges against Justin Lee for his role in the ethanol plant, alleging he misappropriated more than $500,000 from a pair of Chinese nationals.

According to the SBC, Lee traveled to Asia in 2009 and 2010—two years after breaking ground on the Ulysses plant—to seek out foreign nationals interested in permanent residency in the United States.

A Chinese couple paid Lee to help them through the EB-5 program to secure U.S. residency for themselves and their child. But before their petition was approved, the SBC says, Lee allegedly transferred the couple’s money to Nexsun and spent it between Aug. 18 and Dec. 31, 2010. The Chinese nationals brought a lawsuit against Lee in 2012, and although they settled for $550,000, Lee ended up paying only $300,000, according to the SBC. Along with the investors, the town of Ulysses has been duped. In the Kansas Watchdog.org article, County Commissioner Marty Long said, “Nexsun initially poured about $1 million into the location on the western edge of Ulysses, mainly on railroad improvements on the site,” Long said. “Who would spend a million on a project and quit?” Today the site is a ghost town.

Nexsun did open an herbal pill manufacturing and distribution business in town and also secured a contract to repair the roof of a local building, none of which has anything to do with an ethanol plant that would provide EB-5 investors with their visas.

Lee is currently in custody in South Korea on charges related to this alleged scheme. South Korea is not obligated to extradite their own citizens to the U.S. for prosecution. Each of the nine wire fraud charges in the indictment car-

ries a statutory maximum penalty of 20 years in federal prison.

Prior Indications of Instability A 2010 article in Hutchnews.com covered the trials and tribulations of Kent, Lee and their EB-5 investments going back to 2005. In the article, Michael Gibson, a registered investment advisor who performs due diligence on EB-5 projects through EB-5 News’ parent company USAdvisors, advised against going with biofuel projects and raised concerns about this particular company.

“Two years ago (2008), his company visited every approved regional center to “do due diligence” and create a portfolio for investors. Lee & Kent was the only company unwilling to meet with him, Gibson said, even after he showed up outside their LA offices,” explains the article.

“We’ve been trying for two years to engage them,” he said. “The message I want your readers to take away is that this is a good program in 22 states.

It has brought in billions of dollars in investments to projects that would never have obtained investment in the first place. But there are bad operations out there.”

EB5news.COM • SEPTEMBER/OCTOBER 2014

EB5news.COM • SEPTEMBER/OCTOBER 2014

Fraud con’t from pg. 13

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PROJECTS by

KRIS STELL

Managing Editor

Homewood Suites in East Point, Ga., which is near the Atlanta airport, received $15 million in funding from 30 EB-5 Immigrant Visa Program investors worldwide. East Point Mayor Jannquell Peters cut the ribbon at the grand opening, and by her side were investors from Dubai and Nigeria.

EB5news.COM • SEPTEMBER/OCTOBER 2014

Project Players American Life Inc., the manager of the project, specializes in real estate development and EB-5 investments, and manages 10 EB-5 Regional Centers across the U.S., including one in Atlanta, the Atlanta EB-5 Regional Center.

This Homewood Suites

by Hilton hotel project consists of 122 rooms, extended-stay accommodations with kitchenettes and a business office. It’s the first EB-5 project in Atlanta, reports Sachin Patel, managing principal of the

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Sachin Patel of the Atlanta EB-5 Regional Center.

Homewood Suites in Atlanta Opens Due to EB-5 Funding can Life Inc. distribution channels outside the United States,” explained Sachin Patel.

“There is no mortgage or debt on the property,” said Raj Patel, “so all the investors will benefit from principal preservation, monthly profit distribution and property appreciation. The bonus for the foreign investors is the green cards.”

Of the 30 investors, over 90 percent are approved for the I-526 to date.

Atlanta center.

Rossmore Management Group of Atlanta owns the land on which the Homewood Suites sits in the airport city of East Point. The two-acre tract qualifies as a “targeted employment area” under federal EB-5 rules. Georgia Department of Labor deemed the site as such when the state’s unemployment rate hovered at 8.1 percent, the highest in the U.S. Through construction and operation, the Homewood Suites is projected to create a total of 503 jobs taking into account indirect jobs, and it’s less than a mile away from the busiest airport in the world.

A report in Asian Hospitality states that Raj Patel, president and co-founder

of Rossmore Management, invested $3 million toward the project. Rossmore had purchased the two-acre tract in 2008 but was unable to find financing to build the hotel. The project was put on hold.

A couple of years later, Raj Patel met Sachin Patel who told him about the EB-5 program and American Life, which also invests in the commercial development projects for its own profit and sustainability. Rossmore broke ground on the hotel in February 2013.

“All investments are under American Life Inc. With respect to fundraising, it is a combination – the $3 million from Raj Patel of Rossmore, and our EB-5 investors who are primarily sourced via the Ameri-

Return on Investment One of the investors quoted in the article stated, “It (the project) enticed me because it had a stable return on investment in a manner that is long-term, and any time you want to pull out, you will always get your

EB5news.COM • SEPTEMBER/OCTOBER 2014

A newly opened

According to a Global Atlanta article ‘Groundbreaking to Green Cards: Immigrant Investors Back East Point Hotel,’ American Life differentiates itself by actually building its projects and holding them until they stabilize, which founder Henry Liebman says is different from other regional centers that are little more than middlemen collecting money from investors and loaning it out to developers.

“With hotels, it usually takes around three years for the investment to stabilize, and American Life EB-5 investors get 4-5 percent on their money while also qualifying for permanent residency, Liebman said.”

In addition, American Life Inc. is very methodical when it comes to underwriting any project.

“We undertook two separate independent feasibility studies for this project. Plus, with Hilton as a partner, we knew what kind of numbers the Hilton Reservation system could generate for the hotel at the Atlanta Airport Market, world’s busiest since 2000.

Plus having a $3m U.S. investor who is a third generation hotelier helped justify our due diligence and move the project forward,” said Sachin Patel.

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WORLD IMMIGRATION

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money back plus the cost of the investment to that point.”

“Our investor wants a good investment and a green card. Most EB-5s, they don’t care about the investment, they just want the green card and their money back in a fixed period of time,” Liebman said.

“The Homewood Suites hotel was at 100% occupancy on opening day. Atlanta Airport is the home of Delta Airlines, which can reach 80 percent of the U.S. within a two-hour flight. Also, Atlanta Airport will soon be the home of Porsche Cars North America, which includes the Porsche Cars Experience Track scheduled to open in early 2015,” explained Sachin Patel.

“We are in the planning phases for a second hotel in close proximity to the airport terminal, which like the Hilton will be available as equity for EB-5 investors. The hotels have no mortgages or liens and are debt free, which allows investors to preserve their principal investments, receive monthly profit distributions and benefit from capital appreciation in addition to receiving their green cards.

“To sum it up, we are an investment company first and foremost,

Survey Says – Wealthy Chinese Heading Overseas

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recent global survey of high net worth individuals by Barclays Wealth discovered that 47 percent of the wealthy Chinese questioned plan to move overseas within the next five years.

The report, “Wealth Insights, The Rise of the Global Citizen?,” is the 18th volume in the Barclays Wealth Insights report series, which tracks the international movements of the world’s high net worth individuals,

our international investors receive the green card as a bonus. Our U.S. investors are investing on project financial returns,” he said.

The Homewood Suites in East Point is the fourth hotel opened by American Life in 2014. Currently, the company is seeking investors for a Hilton Embassy Suites at the Seattle – Tacoma Airport.

exploring where they live, work, retire and are planning to move to. Respondents were drawn from 17 countries around the world, across Europe, North America, South America, the Middle East, Africa and AsiaPacific. More than 750 of the respondents identified themselves as entrepreneurs.

The Barclay’s report references a recent report from international consultancy New World Wealth, which found that China had the largest proportion of high net worth individuals emigrating in the decade up to 2013. The majority of those emigrants went to Hong Kong, Singapore, Australia, the U.S. and the UK. Liam Bailey, Head of

Residential Research at global real estate consultancy Knight Frank, puts the Chinese preference for Hong Kong and Singapore down to convenience of doing business.

“The reality is that most ultra-high net worth individuals in China are probably making money in China right now. So, for business reasons, they need to be relatively close,” Bailey said.

More information on the results specific to China

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EB5news.COM • SEPTEMBER/OCTOBER 2014

Homewood con’t from pg. 17

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IMMIGRANT TRENDS

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Migration Drivers from Barclay’s Survey • Thirty-five percent of respondents are planning a move to another country simply because they desire a better climate.

• Twenty percent are looking to move in order to experience another culture.

• For the younger high net worth individuals (under 45), the top priorities when considering a move to another country are better education for their children (37%), economic opportunity (29%), and career development (29%) • For older generations (over65), retirement and economic security are of greater importance.

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MPI Report Findings on Immigrant Investor Programs Such as EB-5

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he demand for immigrant investor programs that offer citizenship in exchange for financial investments worldwide is growing, as the demand from China and other emerging economies grows. As more countries set up programs, other countries with longstanding ones are questioning the programs’ economic benefits and are looking for ways to increase their impact, reports the Migration Policy Institute in a new report.

The report, Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration, examines the increasing mix of players and types of immigrant investor programs, their policy design, benefits and other considerations.

During the past decade, the number of countries with immigrant investor programs has increased dramatically, and about half of all European Union member states now have dedicated routes. Demand has increased as well, with the U.S. EB-5 Immigrant Investor Visa Program, for example, nearing its annual cap of 10,000 visas this year for the first time, after two decades of relatively low uptake.

“Cash-for citizenship” policies have not been without controversy, however, as Malta experienced in 2013. Its plan to sell passports for 650,000 euros

(later upped to 1.15 million euros in cash and investments) sparked an outcry in the country — as well as in Brussels, since a Malta passport grants immediate access to EU citizenship.

“In theory, the benefits of investor programs are straightforward: investors obtain new residency rights,

while destination countries gain revenues or job-creating investments,” authors Madeleine Sumption and Kate Hooper write. “In practice, policymakers have often found the results disappointing.”

The report argues that the clearest economic benefits

EB5news.COM • SEPTEMBER/OCTOBER 2014

are in an article in The Economic Times of India titled “Half of wealthy Chinese planning to leave the country: survey,” which states that for the Chinese, their top destinations are Hong Kong (30 percent) and Canada (23 percent) with top reasons for leaving being better educational and employment opportunities for their children. Additionally, China’s economic expansion has come at great environmental cost, especially in the big cities, which is helping drive migration.

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WORLD IMMIGRATION

MPI con’t from pg. 21

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Russian Money in Britian’s EB-5-Like Program

B

ritain operates a similar program to the U.S.’s EB-5 Immigrant Visa, where three-year investor visas are granted to foreigners who invest £1 million or more in government bonds.

Whereas in the United States, 80 percent of the immigrants are Chinese, in Britain it’s the Russians that are making the most impact.

A recent article in The Economist describes how the wealth the Russians are bringing to the country have effectively “honey trapped” the government, making if difficult for them to attempt to scare off the oligarchs as crisis occurs in the Ukraine.

“Russian wealth has permeated the upper reaches of society in Britain more completely than in any other Western country. The amount of money that post-Soviet oligarchs have pumped into “Londongrad” means, say critics, that David Cameron’s government will never crack down on them, no matter how incensed it is by Russia’s enormities.”

A prime example of how the Russian’s wealth is being distributed into Britian can be found in the case between Roman Abramovich, the billionaire who owns Chelsea Roman Abramovich

football club, who was in a legal battle with the late Boris Berezovsky, another expatriate tycoon. The case generated legal costs of around £100m.

This is how Britain’s program works: • invest £1,000,000 or more in UK government bonds, share capital or loan capital in active and trading UK registered companies • apply to settle after 2 years if you invest £10 million • apply to settle after 3 years if you invest £5 million Russians were granted 433 of these visas between the third quarters of 2008 and 2013, more than any other nationality. Only the Chinese came close, with 419. According to the Independent Schools Council, 8.3% of private schools’ non-British pupils last year were Russian. That could mean up to £60m a year in fees. The number of Russian pupils has doubled since 2009.

The program guidelines stipulates that immigrants can’t invest in companies mainly engaged in property

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EB5news.COM • SEPTEMBER/OCTOBER 2014

come from programs that encourage cash payments to the government or national development funds, though it notes that these are the most controversial as they accentuate public concerns about whether it is appropriate to sell citizenship.

Programs requiring private-sector investment — such as the U.S. EB-5 program — are promising in theory but raise some thorny compliance issues. In particular, the government may have little control over where and how the money is invested, as well as whether investments actually create the expected number of jobs.

Citing concerns over economic benefits, Canada earlier this year scrapped its federal program. And the United Kingdom’s Migration Advisory Committee has argued that the country is giving away residence rights in return for a government bond investment with no economic value. Australia, meanwhile, has adjusted its program to target investors who will make clearer economic contributions.

The Migration Policy Institute is an independent, nonpartisan, nonprofit think tank in Washington, DC dedicated to analysis of the movement of people worldwide. MPI provides analysis, development and evaluation of migration and refugee policies at the local, national and international levels. Learn more at www.migrationpolicy.org.

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INVESTMENTS

Russians con’t from pg. 23 investment, property management or property development. But that doesn’t mean they aren’t buying property, According to Savills, an estate agency, 4% of buyers in “prime central” areas, such as Chelsea and Westminster, are Russians, spending £6.3m on average, explains the article.

Additionally, “Some 28 Russian firms, with a market value of £260 billion, are listed on London’s main exchange (compared with just two in New York). Another 15 Russian-focused firms are on the AIM market for growth stocks. Dozens more have depositary receipts (special overseas shares) that are traded in London. Some $46 billion of Russian stock has been sold in London IPOs since 1996, according to Dealogic.”

According to VisitBritain, in 2012 Russian visits to Britain were worth £240 million ($402.2 million), equalling a £1,057 average spend per visit, almost double the overall market average of £600 per visit.

There has been a 64 percent rise in Russian visitor numbers to the U.K. from 2009 to 2012.

EB-5 Investments Hits Social Media Follow this industry-leading resource on EB-5 projects and investments through your favorite social media outlet.

The future of EB-5 investing is located at www. eb5projects.com, where investors can find information on EB-5 Regional Center and Direct (Franchise) projects to determine which one is the best investment for you.

The site gives you access to independent third-party research and due diligence reports. This eliminates the need for agents and finders as you can access project details and contact the representatives directly.

EB5Projects.com gives you the tools to provide the best service possible to your clients; you’ll be able to answer the questions your clients ask such as how many projects are being offered? Who is offering them? Which ones appear to offer the best chance to achieve immigration and investment goals?

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Project Representatives As a project representative, you can distribute your project information to a wide network of potential investors, their attorneys and advisors without having the expense of travel or hosting seminars. You can reduce subscription and administrative costs to investors by issuing directly without the need for an agent or finder.

EB5Projects.com currently has 328 projects and is your guide to basic projects details: project name, project image, investmenttype, project category, percentage of EB-5 funds used in the project, investment amount, total job creation, Regional Center under which the project falls, state, project location, overall funding required, total EB-5 funding required, project Description, project location description, and project timeline.

This site also provides a detailed outlook on the EB-5 project – associated fees, risks, capital structure, job creation, documents and escrow.

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EB5news.COM • SEPTEMBER/OCTOBER 2014